How Much Is Your Privacy Worth?

People can use your sensitive personal information to discriminate against you.

Anyone paying attention knows that his or her Web searches, Facebook feeds, and other online activity isn’t always safe—be it from the prying eyes of the NSA or those of the companies providing a social networking service.

While a substantial chunk of the populace finds all this tracking creepy and invasive, though, there’s a demographic that collectively shrugs at the notion of being mined for data.

Some startups hope to exploit this by buying access to your Web browsing and banking data (see “Sell Your Personal Data for $8 a Month”). Luth Research, a San Diego company, is now offering companies an unprecedented window into the private digital domains of tens of thousands of people who have agreed to let much of what they do on a smartphone, tablet, or PC be tracked for a $100 a month.

Luth’s “ZQ Intelligence” service collects and analyzes data from preselected participants’ phones and computers via a virtual private network connection. Data is routed through the company’s servers where it is collected and analyzed for trends. The company doesn’t view the contents of messages, but what it does gather includes where smartphone users are at any given moment, what websites they are visiting, what queries they are feeding into Google, and how often they check Twitter. The program’s participants are also asked to answer questions about their behavior.

Luth’s current and former clients include Subway, Microsoft, Walmart, the San Diego Padres, Nickelodeon, and Netflix. The information it collects can help companies decide where to spend advertising dollars. Advertisers want better targeting because click-through rates for online ads now stands at less than .01 percent.

Luth did a project for Ford Motor Company this year—Ford wanted to better understand customers’ “path to purchase.” The company rounded up research subjects in the market for a car, and then tracked the journey they took from researching to finally buying. A customer might drive to a dealership, browse other automakers’ websites while there, and research financing options later. All of that behavior can be analyzed to help Ford figure out where to best spend its advertising dollars. If it turns out that consumer review sites are a prominent part of the process, for instance, Ford can focus on commissioning reviews, partnering with the sites, and buying ads there.

Ultimately, Luth found that by the time a customer actually visits a car manufacturer’s website, they’re most likely ready to buy a car. “That’s a big deal,” says the company’s senior executive for marketing, Becky Wu. “We didn’t know that until this project. If you know that person is really ready to buy, it’s a hot lead.”

If it also sounds annoying and intrusive, you’re probably not the best candidate for ZQ Intelligence. But as many as 20,000 PC users and 6,000 smartphone users are, at any given time, subjecting themselves to such scrutiny in exchange for $100 a month or so, depending on how many surveys they fill out. Luth hawks that data to the highest bidder. Wu says her company’s approach is especially valuable because clients can ask participants follow-up questions about their behavior.

Luth’s founder and CEO, Roseanne Luth, says participants can uninstall the software anytime they want (though they’ll stop earning any money at that point). “People are willing to be tracked as long as they’re in control,” Luth says.

In a survey of 1,100 smartphone users by PunchTab, an advertising company, in April, 27 percent of respondents said they would allow themselves to be tracked by retailers on mobile devices as long as they got something in return—such as coupons or sales alerts.

Big communications companies are figuring that out, too. Last month, Verizon announced a new loyalty program for its 100 million U.S. wireless customers, offering them “Smart Rewards” for allowing some of their location and Web browsing behavior to be tracked and sold to marketers.

This kind of tracking will only get more sophisticated. Luth says it is working on a program that will incorporate the audio in a person’s environment with the data being collected to try to determine what they’re doing. Any new insight into the way we think is valuable it seems, at least to someone.